MobiKwik’s Lending Pivot: Tackling Payment Revenue Stagnation

MobiKwik Navigates Q4 Results Amidst Payment Revenue Conundrum

MobiKwik’s recent Q4 results have brought to light a significant question: how can payment Gross Merchandise Value (GMV) grow by 58% and UPI transactions surge by 170%, while payment revenue has remained virtually unchanged for over a year? This paradox lies at the heart of MobiKwik’s evolving business strategy and will likely shape its future trajectory. The company, which has diligently built its fintech empire over the past eighteen months, reported turning EBITDA positive and a recovery in Profit After Tax (PAT). With improved lending margins, management expressed increased confidence, particularly following the regulatory shifts experienced in FY25.

The company’s strategic direction increasingly points towards becoming a regulated lending and merchant-finance platform, rather than solely a payments entity. A key enabler of this shift is its recently acquired NBFC license. However, this transition is far from complete. The economics of its legacy payments business continue to face headwinds, presenting a top-of-the-funnel challenge for MobiKwik. Despite a difficult FY25 marked by regulatory disruptions in its lending arm and substantial losses, MobiKwik has shown operational turnaround signs. In the March quarter, the fintech firm posted a consolidated net profit of ₹4.4 Cr, a significant improvement from a loss of ₹56 Cr in the prior year. EBITDA also turned positive, reaching ₹17.4 Cr. While revenue growth was modest at 7.8% year-on-year, profitability across both payments and financial services businesses saw substantial improvement, suggesting that the most challenging period following the Reserve Bank of India’s (RBI) Buy Now, Pay Later (BNPL) and First Loss Default Guarantee (FLDG) policy changes might be behind them.

The Persistent Challenge of MobiKwik’s Payment Revenue

The most striking figure from the Q4 results is the stagnation in payment revenue, which stood at ₹211.6 Cr in Q4 FY26, identical to Q4 FY25. Despite substantial increases in transaction volumes, the revenue from payments has not kept pace. This trend appears to be a structural characteristic rather than a temporary issue, largely due to the company’s heavy reliance on Unified Payments Interface (UPI) transactions.

MobiKwik’s payment take rate has seen a considerable decline, falling from 64 basis points (bps) in Q4 FY25 to 40 bps in Q4 FY26, representing a 37% drop in yield within a year. When compared to FY24’s 83 bps, the monetization per rupee of GMV has effectively halved over two years. Management acknowledged during the earnings call that this monetization pressure is not confined to UPI alone, with take rates in some legacy businesses also moderating. This suggests a broader structural compression across the payments stack, not just a temporary dilution from UPI, where Merchant Discount Rate (MDR) remains zero. Consequently, every additional UPI transaction boosts GMV but exerts downward pressure on the blended revenue yield.

MobiKwik’s underlying thesis is that UPI users will eventually transition to its wallet, bill payment, lending, and merchant products. While this may materialize in the long term, the current quarter’s numbers do not yet provide clear evidence of this downstream monetization. The company’s CFO, Upasana Taku, noted during the post-earnings call that the increased UPI mix in overall payment GMV has hindered significant revenue growth thus far, but expressed optimism about future growth driven by existing investments. Effectively, MobiKwik is now leveraging UPI primarily as a customer acquisition and engagement tool, aiming to monetize through its lending, merchant payments, bill payments, and financial distribution services.

Financial Services: A Path to Recovery and Growth

The financial services segment, primarily its lending business, emerged as the strongest performer in the quarter. The gross margin progression over the last five quarters has been impressive, growing from 4% to 13%, then to 42%, 57%, and finally reaching 59% in the reported quarter. The proportion of Super Prime borrowers has also increased significantly, from under 10% to 32%. Delinquency trends have improved across all origination cohorts, showing approximately 35% lower risk compared to peak stress levels, and repeat borrower contribution has risen from 20% to 63.5%.

While the 19x year-on-year increase in gross profit was notable, it is important to consider that Q4 FY25 was an exceptionally weak quarter due to the regulatory disruptions affecting FLDG and BNPL, which caused gross margins to collapse to 4%. A more indicative measure is the sequential recovery since Q2 FY26, where margins steadily improved from 42% to 57% and then to 59%, aligning with the enhanced quality of borrowers. The net margin in this vertical also saw a substantial improvement, rising to 5.39% in Q4 from 0.35% a year earlier, with sequential margin improvements observed throughout FY26.

Despite these positive trends, a crucial caveat is the 7% quarter-on-quarter decline in financial services GMV in Q4, from ₹900 Cr to ₹837.7 Cr. The company attributes this to a deliberate strategy of prioritizing profitability over volume, indicating that lending volumes are not currently expanding in absolute terms. Full-year FY26 disbursals stood at ₹3,238 Cr, a 31% increase over the depressed FY25 levels, but still below FY24 figures when the business operated at a considerably larger scale with a broader product mix. MobiKwik has materially scaled down its lending operations from their peak, and the extent of future recovery remains to be seen. Notably, financial services revenue for FY26 was ₹261.9 Cr, significantly lower than the ₹557.9 Cr recorded in FY24.

MobiKwik’s NBFC Ambition: A Strategic Imperative

Perhaps the most significant development, though not immediately reflected in current earnings, is MobiKwik’s strategic move to evolve beyond a payments intermediary into a regulated lending infrastructure platform. The company secured an NBFC license from the RBI last month, over a year after incorporating its wholly-owned subsidiary, MobiKwik Financial Services Private Limited. Fintech analysts highlight that regulatory positioning is increasingly becoming a competitive advantage in the Indian fintech landscape. While many players possess strong distribution capabilities, fewer command meaningful lending architecture or regulatory flexibility, areas where MobiKwik may hold an underappreciated strategic edge.

Unlike peers reliant on pure lending service provider (LSP) models, MobiKwik’s NBFC ambitions potentially allow it to participate more directly in lending economics through co-lending, merchant finance, and balance-sheet partnerships. If executed effectively, this could significantly enhance its monetization capabilities over time. However, this strategic pivot fundamentally alters the company’s risk profile. Future challenges will extend beyond user acquisition and payment processing to encompass capital access, underwriting discipline, regulatory execution, and sustainable balance-sheet management.

MobiKwik is actively seeking to escape the well-documented paradox of payments in the Indian fintech space, where scale alone no longer guarantees meaningful monetization. The company appears to recognize that UPI has transformed consumer payments into low-yield infrastructure rails. Its future strategy is therefore shifting towards merchant finance, lending, and regulated financial infrastructure. While the business has recovered from previous stress, its economics are still below earlier levels. The ongoing transition remains incomplete, with payment monetization continuing to weaken, merchant investments still incurring losses, and the lending business, though healthier, operating at a scale well below its previous peak.

Markets Watch: Other Fintech Performances

In other market news, Zaggle reported a strong Q4 FY26 with revenue up 50% YoY to ₹617.9 Cr and profit rising 30% to ₹40.6 Cr, driven by growth across its key segments. Veefin Solutions also showed robust performance, with Q4 FY26 revenue increasing 27% sequentially to ₹131.3 Cr and profit more than doubling to ₹16 Cr, supported by expansion in its fintech SaaS offerings. Matrimony reported steady Q4 FY26 results, with revenue up 7.8% YoY to ₹116.8 Cr and profit rising 18.3% to ₹9.7 Cr, alongside a dividend announcement. Shadowfax turned profitable in Q4 FY26, posting a net profit of ₹55.8 Cr on revenue that surged 74% YoY to ₹1,237 Cr, fueled by strong express delivery volumes and market share gains. Meanwhile, Flipkart has reportedly deferred its IPO plans until at least 2028, focusing on achieving EBITDA breakeven in FY27. TAC Infosec reported strong H2 FY26 growth, with revenue up 54% YoY to ₹27.8 Cr and profit up 30% to ₹10.8 Cr, despite facing headwinds from crypto fair-value losses.